Lynch budget plan keeps taxes level

$315.6 million fiscal 2014 proposal adds to reserves (VIDEO)

LOWELL -- City Manager Bernie Lynch said Thursday he is proud of Lowell's fiscal 2014 budget because it reflects a city on firm financial footing.

In a meeting with The Sun's editorial board, Lynch highlighted how the $315.6 million budget that would go into effect July 1 calls for a second straight year where property taxes will stay level, which comes at the same time the city has taken steps to boost its reserves.

Keeping property taxes from properties already online stable will increase the city's excess tax-levy capacity to close to $12 million, which is in addition to the $16 million the city expects to have in its reserve accounts by later this year.

"The big story of the city's finances is that we have been holding the line on taxes while building the city's reserves," Lynch said. "We are very stable."

The manager said he is hopeful the city's work to increase its reserves from less than $10 million several years ago to its current number will help Lowell keep improving its bond rating.

The city's current rating is A1 and the city hopes to get it increased to AA later this year, which Lynch said would reduce borrowing costs and also send a strong signal to those thinking about making investments in the city.

Chief Financial Officer Tom Moses, who joined Lynch for the meeting, said the city administration intends to continue to ask the City Council for future budget surpluses to be plowed into the city's reserves.

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Lynch also took time Thursday to highlight the investments the city government is making in the coming fiscal year.

Included in the manager's proposed budget is an additional $138,000 for recreation programs and summer jobs for those staffing summer recreation activities. He is also asking the City Council to increase the city's local contribution to city schools by $2.5 million.

The council has already approved Lynch's $13.6 million capital plan for the coming fiscal year, about half of which will fund work in city schools. The capital spending will also include $1.3 million to improve roads in the city and infrastructure work in the downtown to make some of its streets two-way.

"This is the largest capital budget the city has ever seen," said Lynch.

The city is able to make the additional investments in areas like recreation and the schools because of cost savings it has achieved, Lynch said.

Lynch defended the process that led up to his decision to award a five-year deal to Waste Management, which beat out the current city vendor, Republic Services. It is a deal expected to save the city $1 million annually compared to its current contract and has drawn council scrutiny in recent weeks.

The manager said when the city initially received proposals from those two companies and three others for both trash and recycling collection, as well as disposal, Republic's cost was $27.6 million and Waste Management's was $26.7 million.

After more pencil sharpening was requested of interested firms, Republic's final proposal was $25.4 million, while Waste Management's was $25.2 million. The numbers were adjusted so that both final proposals were based on the firms collecting the same amount of trash, said Lynch, who had previously told the City Council the gap between the bids was around $500,000.

Lynch said a key factor in Waste Management securing the deal was an $850,000 rebate it was able to offer to the city as a result of Wheelabrator, a Waste Management subsidiary, holding the contract with the city for disposal.

The city's contract with Waste Management will mean Wheelabrator will continue doing the disposal work once its current disposal contract with the city ends in two years, said Lynch.

"The savings from the new contract will help us achieve the goal of no tax increase that the City Council put in front of me," said Lynch.

Another significant savings is a $2 million reduction in the line item for health-insurance costs, a result of the city's switch to the state's Group Insurance Commission.

Lynch also said the city's enterprise funds are in great shape. The water and parking enterprise funds are not expected to require rate increases for years. The budget does call for a 5 percent sewer-rate increase, which will increase the average ratepayer's bill by $17.

The council this week approved Lynch's proposal to establish an enterprise fund for the Lowell Memorial Auditorium. The fund is projected to lose $250,000 this fiscal year, though Lynch said that would be less of a hit to city finances because the city has provided a $320,000 subsidy to the auditorium in recent years.

The City Council voted this week to delay action on the city's $315.6 million fiscal 2014 budget until Tuesday night at 6 p.m.

Councilors can make cuts to the budget Lynch has proposed, but cannot add to it.

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